Creditors file objections to Detroit bankruptcy

By ASSOCIATED PRESS | 8/19/13 8:39 AM EDT

DETROIT — Protesters gathered outside federal court in Detroit on Monday as creditors began filing objections to the beleaguered city's request for bankruptcy protection, the largest municipal filing in U.S. history and one aimed at digging the Motor City out of billions of dollars in debt.

Judge Steven Rhodes set Monday as the eligibility objection deadline in the bankruptcy petition by Detroit emergency manager Kevyn Orr.

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Creditors — including bond holders, insurers, banks, employee pension funds, individuals and companies that provided services — have until just before midnight to file objections electronically.

A group of about 30 city residents arrived outside the court building Monday morning to file individual objections to the bankruptcy request.

"Hopefully, we'll have the opportunity to argue why Detroit should not be allowed to go into bankruptcy," said the Rev. Charles Williams II, Michigan chapter president of the National Action Network, a grassroots organization that opposes the state's emergency law.

Williams told reporters outside federal court before the group went inside to file objections that the forms arrived last week to the homes of some of the group's members. About 40 objections had been filed by early Monday afternoon.

The group is being advised by a former corporation counsel for the city.

"The emergency manager made no reference to this," Williams said of the forms being mailed to city residents. "Two or three business days to file a legal objection is not fair to the people of Detroit."

The Associated Press left a message Monday with Orr's office to determine if the forms the group said they received last week were authorized by Orr or are part of the process allowing creditors to file objections.

The deadline is just one of several steps that could lead to federal Judge Steven Rhodes allowing Detroit into bankruptcy protection while it restructures.

Orr filed for bankruptcy on July 18. He claims the city has at least $18 billion in liabilities, from underfunded pensions and health care costs to bonds that lack city revenue to be paid off.

Orr stopped payment on $2.5 billion in debt in June.
The city has until Sept. 6 to file its responses to any objections by creditors. A multi-day hearing on the eligibility question is scheduled to start Oct. 23.

Detroit residents, so far, have been left out of the bankruptcy process, said Randy Heard, a 52-year-old unemployed gas utility worker.